US mortgage rates rose back above 5 per cent, ratcheting up pressure on the cooling housing market.
The average for a 30-year loan increased to 5.22 per cent from 4.99 per cent last week, Freddie Mac said on Thursday (Aug 11) in a statement. That's the first increase since Jul 21.
This year's rise in borrowing costs has started to calm the pandemic-era frenzy that gripped housing markets across the country. Potential buyers have been sidelined as they struggle to find affordable properties. These days homes are lingering on the market longer, fuelling an increase in housing inventory in July, according to a Realtor.com report.
"The 30-year fixed-rate went back up to well over 5 per cent this week, a reminder that recent volatility remains persistent," said Sam Khater, Freddie Mac's chief economist. "Although rates continue to fluctuate, recent data suggest that the housing market is stabilising as it transitions from the surge of activity during the pandemic to a more balanced market."
With the market cooling, homebuilders are now facing a rise in unsold properties. Confidence among those companies plunged in July as sales and buyer traffic slowed, according to a survey from the National Association of Home Builders and Wells Fargo .
Freddie Mac's mortgage data is collected from Monday through Wednesday. On Mortgage News Daily, which updates the figure more frequently, the rate on a 30-year loan hit 5.18 per cent late on Wednesday.
"Real estate markets continue on the path towards rebalancing," said George Ratiu, Realtor.com's manager of economic research. "These shifts point towards a welcome change for buyers who are still in the market." BLOOMBERG